Blog Post

New Jersey Supreme Court Holds That High-Low Agreement Supersedes Plaintiff’s Offer of Judgment

New Jersey Legal Pulse

On July 19, 2018, the New Jersey Supreme Court, affirming both the trial court and Appellate Division, decided Serico v. Rothberg (A-69-16). In its decision denying Plaintiff’s attempt to recover her attorney’s fees and costs pursuant to New Jersey’s offer of judgment rule (R. 4:58, et seq.), the Supreme Court relied upon basic principles of contract interpretation and reminded all New Jersey lawyers and parties of the risks of relying upon silence and omission when later enforcing one’s rights.

The offer of judgment rule can be an effective tool to encourage settlement, primarily based on the threat that if the case does not settle, the party rejecting the offer may be forced to pay substantial attorney’s fees and costs. Rule 4:58 provides that if a party extends an offer of judgment which is not accepted and the party obtains a money judgment in an amount that is 120 percent or more of the offer, then the offeror would be entitled to seek their costs of the lawsuit, including attorney’s fees. R. 4:58-2(a). A high-low agreement, unlike the offer of judgment rule, does not encourage settlement, but instead limits parties’ risk at trial. As defined by Black’s Law Dictionary, a high-low agreement is “[a] settlement in which a defendant agrees to pay the plaintiff a minimum recovery in return for the plaintiff’s agreement to accept a maximum amount regardless of the outcome at trial.”

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